Did a publisher owe Florida sales tax on the paper, printing, folding, and binding used to produce a free apartment advertising guide?

Plain-English summary

The publisher did not owe sales tax on the paper, printing, folding, and binding used for the apartment guide. The Department reviewed sample issues and found that the guide was distributed regularly, free of charge, through newsstands in public venues and consisted primarily of apartment-complex advertising.

Those facts satisfied the publication exemption in section 212.08(7)(w) and the rule covering qualifying shoppers and free-circulation periodicals. The ruling therefore approved exempt treatment for the described production purchases.

What this means for you

Free distribution alone was not the only fact. The guide's regular issuance, advertising character, public-newsstand distribution, and the Department's review of actual copies supported the exemption. A paid publication or a materially different content and distribution model could be treated differently.

Common questions

Q: Was the paper used to print the guide exempt? Yes, under the stated facts.

Q: Were the printing, folding, and binding charges exempt too? Yes.

Q: What was the guide's content? It consisted primarily of advertising for apartment complexes.

Q: How was it distributed? Regularly and free of charge through newsstands in public venues.

Citations and references

• Fla. Stat. §§ 212.05 and 212.06(16)(a) — sales and use tax on tangible personal property and publisher use
• Fla. Stat. § 212.08(7)(w) — publication exemption
• Fla. Admin. Code r. 12A-1.008(3) — newspapers, shoppers, and free periodicals
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 02A-017

Original ruling text

SUMMARY

QUESTION: Does Company A have to pay sales tax on the
paper, printing, folding and binding of an apartment guide?

ANSWER- BASED ON THE FACTS BELOW: No. Based on the
information provided the apartment guide satisfies the
exemption requirements.

Mar 18, 2002

Re: Technical Assistance Advisement 02A-017
Sales and Use Tax - Shoppers
Section, 212.08(7)(w), F.S.
Rule 12A-1.008(3), F.A.C.

Dear :

This is in response to your letter dated January 29, 2002, and
other correspondence provided requesting a technical assistance
advisement (TAA) regarding the above referenced party and
matter. Your letter has been carefully examined and the
Department finds it to be in compliance with the requisite
criteria set forth in Chapter 12-11, F.A.C. This response to
your request constitutes a TAA and is issued to you under the
authority of section 213.22, F.S.

FACTS

You state in your letter referenced above that you are
circulating XXX (Guide) on a regular basis. It is distributed
free of charge through newsstands located in public venues in
the area. You have enclosed copies for our review, along with
copies of invoices from the Printer and the Binder. These
invoices show that you are paying sales tax to the Printer on
paper and printing and to the Binder on folding and binding.

ISSUE PRESENTED

Whether the Guide is exempt under the provisions of Section
212.08(7)(w), F.S.

TAXPAYER POSITION

You provide in your correspondence several reasons why you
believe no tax is due on 1) the paper and printing that is
supplied by the Printer; and also, on 2) the folding and binding
provided by the Binder. You cite s. 212.08(7)(w), F.S., and
Rule 12A-1.008(3), F.A.C., for support of your position that no
tax is due on these services, because your guide is primarily
advertising, is distributed free, and is published on a monthly
basis. You have provided three issues of the Guide for our
review.

APPLICABLE STATUTES AND RULES

Section 212.05, F.S., provides in pertinent part:

It is hereby declared to be the legislative intent that
every person is exercising a taxable privilege who engages
in the business of selling tangible personal property at
retail in this state, including the business of making mail
order sales, or who rents or furnishes any of the things or
services taxable under this chapter, or who stores for use
or consumption in this state any item or article of
tangible personal property as defined herein and who leases
or rents such property within the state.

(1) For the exercise of such privilege, a tax is levied on
each taxable transaction or incident, which tax is due and
payable as follows:

(a)1.a. At the rate of 6 percent of the sales price of each
item or article of tangible personal property when sold at
retail in this state, computed on each taxable sale for the
purpose of remitting the amount of tax due the state, and
including each and every retail sale.

Section 212.06(16)(a) and (b), F.S., provides:

(16)(a) Notwithstanding other provisions of this chapter,
the use by the publisher of a newspaper, magazine, or
periodical of copies for his or her own consumption or to
be given away is taxable at the usual retail price thereof,
if any, or at the "cost price."

(b) For the purposes of this subsection, the term "cost
price" means the actual cost of printing of newspapers,
magazines, and other publications, without any deductions
therefrom on account of the cost of materials used, labor
or services cost, transportation charges, or other direct
or indirect overhead costs that are a part of printing
costs of the property. However, the cost of labor to
manufacture, produce, compound, process, or fabricate
expendable items of tangible personal property which are
directly used by such person in printing other tangible
personal property for sale or for his or her own use is
exempt. Authors' royalties, fees, or salaries, general
overhead, and other costs not directly related to printing
shall be deemed to be labor associated with manufacturing,
producing, compounding, processing, or fabricating
expendable items.

Section 212.08(7)(w), F.S., provides:

(w) Certain newspaper, magazine, and newsletter
subscriptions, shoppers, and community newspapers.-Likewise exempt are newspaper, magazine, and newsletter
subscriptions in which the product is delivered to the
customer by mail. Also exempt are free, circulated
publications that are published on a regular basis, the
content of which is primarily advertising, and that are
distributed through the mail, home delivery, or newsstands.
The exemption for newspaper, magazine, and newsletter
subscriptions which is provided in this paragraph applies
only to subscriptions entered into after March 31, 1997.

12A-1.008(3), F.A.C., provides:

(3)(a) Periodicals that meet the following requirements are

exempt from tax:

1. The periodical is published on a regular basis;

2. The periodical is distributed free of charge to the
   recipient by mail, home delivery, rack machines,
   newsstands, or similar method; and

3. The content of the periodical is primarily advertising.

(b) The sale of subscriptions to periodicals that are
delivered to the subscriber by mail are exempt.

(c) Distributors of tax exempt periodicals may issue an
exemption certificate to their vendors in lieu of paying
tax on the publishing or printing costs of, or for the
purchase of items, such as paper and ink, that are
incorporated into and become a component part of, the
publication.

RESPONSE

Section 212.05, F.S., provides that tax is imposed on the sales
price of each item or article of tangible personal property sold
at retail in this state. Section 212.06(16)(a), F.S., further
provides that the use by a publisher of copies of a newspaper,
magazine, or periodical for its own consumption or to be given
away is taxable. Use tax is due on the "cost price" of the
publication.

Section 212.08(7)(w), F.S., and Rule 12A-1.008(3), F.A.C.,
provide exemptions for certain publication from the tax imposed
by Chapter 212, F.S. The Guide is distributed on a regular
basis, free of charge, through newsstands located in public
venues in the area. It consists primarily of advertising for
apartment complexes.

Based on the information provided in your letter and on review
of the included sample copies, the Guide satisfies the exemption
requirements of s. 212.08(7)(w), F.S. The Guide also satisfies
the exemption requirements of Rule 12A-1.008(3), F.A.C.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes, or judicial interpretations of the
statutes or rules, upon which this advise is based, may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request and
related backup documents are public records under Chapter 119,
F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Valerie Koenitzer
Senior Tax Specialist
Technical Assistance and Dispute Resolution
(850) 922-9412

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